To the outside observer, Ken Wirth buys a new car every 18 months.
For the past 30 years or so, you'd be hard-pressed to find him driving the same make or model for more than two years. As the owner of a financial service in Connecticut, Wirth is well off, but not that well off.
Wirth leases and he's not bashful to say it. In fact, he feels it shows off his intellect.
Rather than being taboo, the popularity of luxury-car leasing by those who could afford to buy outright proves that image is everything, but practicality comes a close second.
Wirth's current car, a Bentley GT, costs him $2,000 a month. "To me a car is a statement about your business," he explains, as well as a good conversation piece.
For the 10-year-old children, 80-year-old women and colleagues of all ages who have goggled at Wirth's Bentley, the question of its lease status hardly comes up -- it's a "don't ask, don't care" mentality.
Besides the great ego boost, for Wirth and many others, leasing luxury just makes more business sense.
"People realized that the old-fashioned emotional relationship with a car is no longer what it used to be," says Wirth. "Now it's more practical."
The leaser is not tied down to a vehicle in a dramatically changing car market, says Steven Posner, president of
Putnam Leasing of Greenwich, Conn., a luxury-car-leasing company which services about 750 dealers in the U.S.
Leasers can switch cars according to flights of fancy or changing fashion tastes without facing depreciation upon buyback, which can be especially painful for those who purchased a $50,000 or even million-dollar car.
Further, an auto loan doesn't show up as an encumbrance when you lease from Putnam, whereas it can tie up personal credit in a purchase, says Posner.
Depending on what state you live in, leasing is also more advantageous in terms of sales tax.
In California, Florida, Connecticut and Massachusetts, for example, tax is paid on a monthly basis rather than upfront. When a car is traded in, the leaser does not receive credit for the sales tax paid, so the less spent on tax, the better.
In the 1980s, says Posner, when business was bad for car manufacturers, they went into leasing, offering customers pleasantly low payments. In the past ten years, leasing exotic and muscle cars has become very popular because it gives the customer more car for less money, Posner explains.
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Putnam's standard monthly leasing programs cater more to serious enthusiasts but offer all prospective customers the ability to finance almost any car, making that childhood dream come true earlier than expected.
First-time customers pay first and last payment, applicable tax, registration costs and a bank fee.
On average, clients sign up for four or five years and can switch to a car of greater or equal value during that time.
A Bugatti Veyron, with a current $1.8 million retail price, goes for about $25,000 per month for a five-year lease and $400,000 to own at the end of the lease (due to interest costs), while a Ferrari F430, retailing for $230,000, costs $3,100 a month.
You Are What You Drive
Shrewd business sense aside, image is still paramount, as Putnam's success proves. The car you drive makes as big an impression as the suit you wear.
To the celebrities, CEOs, doctors and chairmen of the board who lease luxury autos, it's a "status symbol," says Posner.
"It means 'I have achieved something in my life and I'm at a point where I can have the best or coolest car I can drive,'" he continues.
Customers are also always looking to upgrade, Posner adds, with 60% not going to term on their leases. "Those with a Bentley coupe are generally on the list for a convertible."
Posner revealed that some of his celebrity clients still don't want others to know they lease, but he revealed that his star athlete customers prefer Cadillacs, Escalades and the Bentley convertible, which is a top seller in all occupations.
OK, so his clients don't really call him that, but they trust Posner like family. "Never get in a car with strangers," reads Putnam's slogan.
Wirth believes most people are completely intimidated by the car leasing and buying experience, so they reach out to someone who can reassure and give them the best service.
"I've known Steven for 16 or 17 years," says Wirth. "He's a really good friend and a quality guy ... a real people person."
Putnam, which has been doing business for 25 years, doesn't have much competition, says Posner, largely because it focuses on building trust. "If you're going to encumber yourself
with a quarter-million
dollar car, you want to know that they'll know who you are and that you have someone to speak to," says Posner. "Every deal is a personalized deal."
Herbert Zucker, an international wealth adviser, wouldn't lease from anyone but Posner, who has actually advised Zucker to pass on certain cars. "
Posner is an extraordinarily honest person," says Zucker. "You don't find that a lot in life; much less with car dealers."
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